Brent crude slides 6.8% as Trump threatens to hit Iran hard

The fragile four-day pause in US-Iran hostilities shattered Tuesday as President Trump vowed to retaliate after Iran launched a surprise ballistic missile attack on American forces.

President Trump threatened to strike Iran "very hard" Tuesday after the Islamic Revolutionary Guard Corps launched multiple ballistic missiles at US forces in the Middle East, ending a four-day pause in hostilities that had sent Brent crude sliding 6.8 percent.

"The IRGC and its terrorist proxies must cease these attacks to avoid further US military response," US Central Command said in a statement, confirming all incoming missiles were intercepted.

The missile barrage at 5:45 p.m. ET Tuesday marked the first Iranian attack since Friday, when the US paused 13 consecutive nights of strikes to allow Omani-mediated diplomacy. Iran's Khatam Al-Anbiya command responded by warning it "will not leave any threats unanswered," while the US blockade on Iranian ports has stopped 18 ships from entering or exiting Iranian waters.

The Strait of Hormuz, which handles about 21 percent of global oil trade, remains effectively closed with only 29 verified crossings recorded from July 24 to 26 — down from roughly 100 vessels per day before the war. Brent crude had fallen 6.8 percent to $85.49 a barrel Monday on hopes of a diplomatic resolution, gains that now face reversal as the risk premium reprices.

US and Saudi Forces Strike Iraqi Proxies

US and Saudi fighter jets conducted joint strikes Tuesday on "multiple terrorist logistics and weapons sites across eastern Iraq," CENTCOM said, retaliating for more than 30 aerial drone attacks over the past 72 hours directed by the IRGC. The Popular Mobilisation Forces, an Iran-backed Iraqi paramilitary group, said at least 20 of its fighters were killed and 32 wounded in strikes hitting seven provinces.

The escalation drew in Saudi Arabia directly, with the kingdom's air defenses intercepting drones launched from Iraq targeting petroleum facilities Monday. Major General Turki Al-Maliki, spokesperson for Saudi Arabia's Ministry of Defense, blamed "terrorist militias affiliated with Iran" and stressed the kingdom's right to respond at the appropriate time and place.

Oil Markets Face Renewed Supply Risk

The collapse of the four-day truce threatens to reverse the sharp decline in crude prices. Brent had dropped 6.8 percent Monday to $85.49, while US benchmark crude fell 7 percent to $83.06, as markets priced in a potential diplomatic resolution. Shipping costs have already surged, with Lloyd's List reporting that tanker rates in the Black Sea, Red Sea, and Persian Gulf have all hit elevated levels simultaneously — a "perfect storm" for energy shipping markets.

The Houthi rebel group, an Iranian proxy, fired ballistic missiles at a Saudi-flagged tanker in the Red Sea on Tuesday, extending the blockade to the Bab el-Mandeb strait. Only 11 commodity ships transited the southern Red Sea gateway Sunday, Kpler data shows, the lowest level in months.

Trump told Fox News the US had "destroyed most of" Iran and warned that if no deal is reached, "we go back to doing what we were doing" — striking Iran. He also threatened to "take out" Iran's Pickaxe Mountain nuclear facility "very easily." Iran's deputy foreign minister, Kazem Gharibabadi, said Tehran has not requested talks with the US in the past 15 days, and the Strait of Hormuz "will never return to its pre-war state."

The last time the US and Iran exchanged fire at this intensity was in early July, when a ceasefire agreed to in mid-June collapsed after just three weeks. That round of fighting sent Brent above $95 a barrel before diplomacy pulled it back. With both sides now signaling renewed confrontation, oil markets face the prospect of a sustained supply disruption through the world's most critical energy chokepoint.

This article is for informational purposes only and does not constitute investment advice.